Abraaj Capital, which completed a $375 million rights issue to its existing shareholders earlier this week, has acquired Riyada Ventures, a MENA-focused venture capital firm. The firm was expected to make such a move with the proceeds from the capital raise, though market chatter had focused on Abraaj potentially buying an Asia-focused competitor.
The acquisition of Riyada is at the core of a new push by Abraaj into the small and medium enterprise (SME) space, the firm said in a statement. Riyada will be integrated by Abraaj Capital into its recently launched SME and Entrepreneurship initiative, which will be headed by Khaldoon Tabaza, the founder and chief executive officer of Riyada.
Established in 2005 in Amman, Riyada Ventures has completed more than 25 regional and international venture-capital transactions. The firm has an additional office in Cairo.
“Abraaj is committed to creating the region's largest dedicated platform to support entrepreneurship and innovation within the high-growth economies of the MENA region,” Abraaj founder and chief executive officer Arif Naqvi said in a statement.
Under the new initiative, Abraaj will invest “hundreds of millions of dollars” in SMEs across Middle East and North Africa. The platform intends to give support to the indigenous entrepreneurship that exists across the region, the firm said, adding it will provide entrepreneurial support at the grassroots level through business monitoring, training and technical assistance.
Abraaj will also allocate a portion of the funds raised for a particular country to the development needs of its less fortunate communities by partnering with established sustainable development funds which provide “patient capital” and subscribe to the “philosophy of sustainable philanthropic capital”, the statement noted.
Since inception in 2002, Abraaj has made more than 35 investments in 11 countries and has recorded 20 exits. The firm is currently in the market for Abraaj Buyout Fund IV, which is targeting commitments of $4 billion and has seen a first close on $2.6 billion.